Shifting Credit

The European aerospace and defense industry's "main credit risks are likely to shift to defense from commercial in the next year," according to a new assessment by the Fitch credit-rating agency.

In a recent investor presentation in London, Fitch analysts found that:

With overall defense budgets in Western Europe under pressure from the general high budget deficits of most countries, the companies most exposed to European defense spending may see their traditional revenue base shrinking in real terms. These companies may choose to pursue growth in many emerging markets, although export opportunities are becoming increasingly competitive and politicised as more and more developed markets-based defense companies chase a limited number of sizeable contracts in countries such as India and Brazil.